Will India Attract $50-70 Billion in Fresh Equity Inflows Over the Next Year? Jefferies Thinks So!
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Synopsis
India is on the brink of attracting substantial equity inflows, with projections of $50-70 billion over the next year. Mutual funds and SIPs are key players in this anticipated growth story. Discover how economic policies and market dynamics could shape India's financial landscape.
Key Takeaways
- India may attract $50-70 billion in equity inflows over the next year.
- Mutual funds and SIPs are crucial for market momentum.
- 2025 is expected to be a year of healthy consolidation.
- GST cuts are likely to enhance consumption.
- Small and mid-cap stocks show promising earnings growth potential.
New Delhi, Sep 19 (NationPress) India is projected to attract fresh inflows between $50-70 billion into equities over the upcoming year, driven primarily by consistent participation from mutual funds and systematic investment plans (SIPs), as reported by global brokerage Jefferies on Friday.
Despite foreign investor positioning hitting multi-year lows, Jefferies maintains that India continues to represent the strongest structural growth narrative in the global market.
In their latest ‘Greed & Fear’ report, Jefferies anticipates that 2025 will mark a period of “healthy consolidation” for Indian equities.
The brokerage forecasts that ongoing domestic flows from mutual funds and SIPs will absorb a significant portion of the expected foreign inflows, thereby aiding the market in maintaining its momentum.
Furthermore, the report points out that India may experience a new rally in 2026 as economic growth accelerates.
Recent government initiatives, such as widespread reductions in Goods and Services Tax (GST), are believed to enhance consumption and liquidity.
Additionally, the recent rate cut by the US Federal Reserve has elevated the prospects for the Reserve Bank of India to implement further rate reductions before the year concludes.
The report states, “There is still a chance that the 10-15 percent return target may be too conservative,” attributing this to the combined effects of GST reductions, potential RBI rate cuts, and improved corporate earnings.
Jefferies also highlighted that India’s small and mid-cap sector, despite its higher valuations, continues to demonstrate stronger earnings growth potential compared to large-cap companies, thus justifying continued investment in this segment.
“India’s small to mid-cap universe, despite elevated valuations, continues to exhibit superior earnings growth potential, endorsing the investment stance,” the report noted.
According to Jefferies, India’s capacity to blend robust domestic demand with enhancing corporate profitability and favorable policy measures distinguishes it as the most appealing growth narrative in global equities.
Point of View
I believe that India's ability to blend strong domestic demand with improving corporate profitability and favorable policy measures underscores its potential as a leading growth narrative in global equities. We should continue to monitor these developments closely.
NationPress
20/09/2025
Frequently Asked Questions
What is the expected inflow amount into Indian equities?
India is expected to attract between $50-70 billion in fresh inflows into equities over the next year.
What factors are driving this expected inflow?
The inflow is driven by steady participation from mutual funds and systematic investment plans (SIPs).
What does the Jefferies report say about the future of Indian equities?
Jefferies describes 2025 as a year of 'healthy consolidation' for Indian equities, with potential for a rally in 2026.
How do government measures impact this outlook?
Recent cuts in Goods and Services Tax (GST) are expected to boost consumption and liquidity, positively impacting the market.
What is the potential for small and mid-cap stocks?
Despite higher valuations, small and mid-cap stocks in India show stronger earnings growth potential compared to large-cap stocks.
